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Openings, comps push 4Q higher

Rolling out new units at a rapid clip, and at the same time building same-store sales, home furnishings big box Linens 'n Things pushed fourth-quarter earnings before one-time items up by 26.0 percent, to $40.2 million.

Sales jumped up by 23.0 percent on the strength of aggressive expansion, to $723.3 million from $587.9 million last year. Same-store sales expanded by 4.0 percent, continuing a rebound from weakness last year, and built on a 1.8 percent increase during the third quarter.

Overall profits rose by almost 400 percent, to $40.2 million from $8.2 million last year, but only because last year's bottom line was weighed down by a $23.7 million after-tax charge to cover restructuring and store closing costs.

The number that Wall Street watches carefully, fully diluted earnings per share before one-time items, rose by 15.4 percent, to $0.90 from $0.78.

For the first quarter, Axelrod forecast overall sales to rise by 10 percent to 13 percent, with same-store sales moving up in the low single digits.

First-quarter earnings are expected in the range of 10 to 12 cents per share, blunted by 3 cents per-share charge the company will take in connection with last week's resignation of president Steve Silverstein.

Firming up the bottom line during the all-important Christmas quarter, LNT widened its average gross margin by 70 basis points, to 41.4 percent form 40.7 percent a year ago. Gross margin dollars increased by 25.0 percent, to $299.3 million from $239.4 million. Operating costs were whittled down slightly, by 10 basis points, to 32.3 percent of sales from 32.4 percent a year ago. In another strong assist to profits, the retailer slashed its interest expense by 61.8 percent, to $408,000 from $1.1 million, generating a cash savings of $660,000.

Linens 'n Things Inc.

Qtr. 1/4 (x000) 2002 2001 % change
a-Earnings in the prior-year fourth quarter were reduced by a $23.7 million after-tax restructuring charge. Excluding the one-time item, net income rose by 26 percent, and fully diluted earnings per shore increased by 15.4 percent.
b-Earnings for all of 2001 were reduced by the $23.7 million after-tax restructuring charge and a $4 million litigation charge stemming from employee lawsuits. Excluding the one-time items, full-year net income in 2002 rose by 24 percent, and fully diluted earnings per share increased by 17.6 percent.
Sales $723,322 $587,899 23.0
Oper. income (EBIT) 65,503 48,884 34.0
Net income 40,240a 8,242a 388.2
Per share (diluted) 0.90a 0.20a 350.0
Average gross margin 41.4% 40.7%
SG&A expenses 32.3% 32.4%
12 months
Sales 2,184,716 1,823,803 19.8
Oper. income (EBIT) 114,269 90,486 26.3
Net income 69,246b 29,749b 132.8
Per share (diluted) 1.60b 1.72b 122.2
Average gross margin 41.0% 40.7%
SG&A expenses 35.8% 35.8%


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